29.04.2004

Terex first quarter sales top US$1 billion

Terex corp, the parent company of Terex-Demag Cranes and Genie aerial lifts has reported a 12.5 percent sales increase to US$1.04 billion (UK£0.6 billion) in its first quarter 2003 results. Crane sales declined marginally, while Genie sales increased by over 12 percent. Backlogs at both companies were up significantly from 2003.

Gross margins rose by almost 25 percent to $160 million (£90 million), which equates to 15 percent of revenue, compared to 14 percent reported in 2003, sales and administration overhead (SG&A) increased to 10.7 percent of sales compared to 9.6 percent in 2003.

Interest expense fell by over 12 percent, leaving a net income after tax of $17 million (£9.6 million), compared to $12 million (£6.7 million) in 2003 - an increase of 42 percent.

"We are encouraged by current trends and our performance in the first quarter," said Ronald M. DeFeo, Terex's chairman and chief executive officer. "We are basically right where we expected to be at this point in time.

"While different product groups are experiencing varying degrees of recovery, overall we are experiencing a strengthened backlog and moderate revenue growth. As we adjust to the higher production levels anticipated for the balance of this year we are experiencing modest dislocations of supply that we feel are natural in a recovery. Steel prices also remain a concern.

"Over the past several years we have become accustomed to working with a very small backlog," continued DeFeo. "The surge in backlog is encouraging, but we realize that this may not be entirely indicative of future trends. The businesses that we would expect to be improved early in an economic recovery are showing stronger trends. The aerial work platform and compact construction equipment businesses are doing particularly well."

Terex Cranes saw revenues decline by 12 percent to $209 million (£117.6 million) as predicted in the company's plan, reflecting the year-end business disposals and the non-reoccurring sales of the inherited Demag used equipment inventory.

Gross margins for the crane business improved slightly to $29.8 million (£ 16.8 million) (14.3 per cent) from $29.6 million (£16.7 million) (12.4 per cent) reflecting an almost two percent improvement as a a percentage of sales from last year. SG&A expense rose to $23.4 million (£13.2 million) (11.2 per cent) from $20.4 million (£ 11.5 million) (8.6 per cent), apparently due to exchange rate factors. As a result net income for the crane business fell to just over $6 million (£3.4 million) from $9.2 million (£5.18 million) in 2003.

An improving business climate in Europe is reflected in the increased backlog up by 26 percent to $239 million (£135 million) over three and a half months worth of business.

"As with last year's performance, our global presence continues to help balance our performance in the first quarter copmmented Steve Filipov, Terex Cranes' president. "The North American market remains depressed for mobile telescopic and lattice boom cranes, but the success of our all terrain product line and the market strength of certain European economies helped to partially offset this. For example, Italy remains a strong market and we had some success in the UK and the Asia/Pacific region. Our tower crane business also continued to positively contribute to our global performance.

"With the difficult North American crane market as a backdrop, we continue to look for global growth opportunities. However, current market conditions require additional selling discipline to ensure profitable growth. We feel that the US crane market is at the tail end of the economic trough that has existed since 2000, and we see some important steps taking place at our customers that point to the prospect of a stronger future," he concluded.


Terex Aerials, largely Genie industries, posted a robust first quarter with revenues up 14 percent to $168 million (£94.6 million). Gross margins improved by a full percentage point to 21.4 percent, while SG7A increased slightly in percentage terms to 9.5 percent. Net income increased to $20.8 million (£11.7 million) from $16.5 last year. The Genie backlog, frequently very lean during 2003 leapt to $77 million (£43.3 million) or six weeks compared to $19 million (£10.7 million) or one and a half weeks at the same time last year, reflecting the rapidly extending lead times among aerial lift suppliers that Vertikal.Net has flagged for months now.

"We are very pleased with our first quarter results," said Bob Wilkerson, president of Terex Aerial Work Platforms. "Our first quarter sales were up 14 percent when compared to the first quarter of 2003, while our operating margins continued to show steady improvement. With increasing order volumes, combined with our cost reduction and integration focus that we sustained in 2003, the building blocks exist to allow Genie to outperform 2003."

Wilkerson added that the rental channel is the company's largest customer base and that over the past few years, it has chosen to age its fleets in order to maximize profits and minimize capital expenditure requirements. "With improved rental markets, we expect that rental companies will not continue to age their fleet as much as they have in the past," he said. "As the rental channel market continues to improve, we would expect to see some rental fleet expansion in 2004."